2019 (1) TMI 1994 - AT - Income Tax

Denial of deduction u/s.80P 2 a i - interest income earned from fixed deposits kept by it with nationalized banks - assessee is co-operative society engaged in the business of providing credit facilities to its members - HELD THAT - As decided in favour of the assessee by the decision of the Co-ordinate Bench of the Tribunal for the assessment year 2012-13 in the case of ITO Vs. Sureshdada Jain Nagri Sahakari Patsanstha 2018 (11) TMI 1589 - ITAT PUNE . Assessee appeal allowed.

Summary

Issues:
1. Denial of deduction u/s.80P[2][a][i] of the Income Tax Act, 1961 to the appellant in respect of interest income earned from fixed deposits.
2. Denial of deduction u/s.80P[2][a][i] of the Income Tax Act, 1961 to the appellant in respect of dividend income and interest on NRF.
3. General ground not pressed.

Analysis:

Issue 1: Denial of deduction u/s.80P[2][a][i] for interest income from fixed deposits:
The appellant, a cooperative society providing credit facilities, contested the denial of deduction for interest income of Rs.71,56,584.00 earned from fixed deposits with nationalized banks. The appellant argued that a Co-ordinate Bench of the Tribunal, Pune, had previously ruled in favor of a similar deduction in another case. The Tribunal reviewed the relevant precedents, including decisions from different High Courts, and concluded that in the absence of a direct judgment from the jurisdictional High Court, it would follow the precedent favoring the assessee. Consequently, the Tribunal set aside the order of the Ld. CIT(Appeals) and allowed the deduction under u/s.80P[2][a][i] for the interest income from fixed deposits.

Issue 2: Denial of deduction u/s.80P[2][a][i] for dividend income and interest on NRF:
The appellant also challenged the denial of deduction under u/s.80P[2][a][i] for dividend income and interest on NRF amounting to Rs.3,028.00. However, during the hearing, the Ld. AR of the assessee informed that they were not pressing this ground, leading to its dismissal as 'not pressed.'

General Ground:
The third ground raised by the appellant was deemed general in nature and required no adjudication by the Tribunal.

In conclusion, the Tribunal partially allowed the appeal of the assessee, specifically overturning the denial of deduction for interest income from fixed deposits based on the precedent set by a Co-ordinate Bench of the Tribunal, Pune. The order was pronounced on the 25th day of January, 2019.